Govt increases Rs200 levy on high-octane fuel for luxury cars to ease crisis

The government on Sunday approved a significant Rs200 per litre increase in the fuel levy on high-octane petrol used in luxury vehicles, in a move to cope with the fuel crisis amid Middle East tensions.

According to a statement issued by the Prime Minister’s Office (PMO) today, Prime Minister Shehbaz Sharif, chairing a video-link meeting, announced that the current levy of Rs100 per litre on high-octane fuel would be raised by an additional Rs200, bringing the total levy to Rs300 per litre.

The government expects the measure to save Rs9 billion per month, with the savings earmarked to provide relief to the general public.

“This decision will reduce the economic burden on the country; the wealthiest segment will bear the cost,” the statement added.

The statement further clarified that the increase applies only to high-octane fuel used in luxury cars. Petrol prices for ordinary vehicles, as well as fares for public transport and air travel, will remain unchanged.

Read More: FinMin says targeted relief package for deserving segments on cards

The prime minister had taken notice of the rising cost of high-octane fuel and instructed the relevant ministry to devise a strategy, the statement said.

The video-link meeting was attended by Finance Minister Aurangzeb, Information Minister Attaullah Tarar, Petroleum Minister Ali Pervaiz Malik, and senior government officials.

Earlier during a press conferance in Lahore, Finance Minister Aurangzeb said that a targeted relief package was being prepared for deserving segments of society.

He invited the public to submit their suggestions for the relief package and said that all ministries, including Petroleum, IT, and Finance, were working on a joint strategy.

Aurangzeb said Prime Minister Shehbaz Sharif had discussed the country’s economic and energy challenges in detail during his address to the nation, noting that regional tensions and war-like conditions could affect energy infrastructure.

Two weeks ago, the government sharply increased diesel and petrol prices by Rs55 per litre or 20% — due to the ongoing US-Israel and Iran war, which has disrupted supply chains and pushed crude oil prices to two years’ highest level.

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The increase in petrol prices was more than the surge in the international market, as the government chose to collect more money than required from motorcyclists and car owners to subsidise the use of diesel, mostly by the public transport and the agriculture sector. However, the prime minister announced last night that the federal government had twice now absorbed the burden of the fuel price increases instead of passing it on to the public.

Both federal and provincial governments have since introduced a range of austerity steps, including an additional weekly holiday, cutting free petrol allocations for ministers, limiting protocol vehicles, and proposing subsidised fuel for students.